Having emerged from the unpredictable year that was 2015, the clear expectation is that 2016 will be a year of recovery, a platform to put the economy on a higher growth path to realise the “good life”.
Accordingly, a growth rate of 4.4 percent has been set for 2016 while the nation’s non-sugar growth is projected at 4.3 percent.
The Agriculture, Fishing and Forestry sector is projected to grow marginally by 0.3 percent. And given its encouraging performance in 2015, sugar production is targeted to grow by 4.8 percent to 242,287 metric tonnes.
Not unexpectedly, the projection for rice output has been tempered, as the industry continues its efforts to synchronize production and existing stocks with domestic consumption and external markets. As a result, production is expected to decline by 8.4 percent from the 2015 level to 630,028 metric tonnes.
Additionally, the Other Crops sub-sector is anticipated to grow by a further 2.5 percent and Livestock, 0.5 percent. For the first time since 2012, the Fisheries sub-sector is expected to record increase in output, growing by a modest 1.5 percent. This sub-sector will require greater policy and management intervention if it is to realise its potential. The Forestry sub-sector is estimated to growth by 2.5 percent with an output of 392,469 cubic metres of timber harvested.
The mining and quarrying sub-sector is targeted to improve by 16.6 percent. Once again, this growth will be driven by gold, whose output is conservatively estimated to increase by 22 percent to 550,000 ounces.
Other mining (sand and stone) is targeted to improve by 4.4 per cent, with the predictable upsurge in construction activities. As the bauxite industry continues to struggle with reorganization and soft prices on the world market, production is expected to be maintained just at the 2015 level of 1,526,467 metric tonnes.
In spite of the targeted growth in sugar and light manufacturing, the manufacturing sector is projected to decline by 0.7 percent, as a consequence of the scaling back of rice production.
The Services sector is expected to grow by 4 percent, with projected growth in the construction sector of 10.5 percent, following a lacklustre performance in 2015. Additionally, with the predicted increase in growth in almost all sectors, during 2016, the level of inflation is expected to be approximately two percent.
Notwithstanding the projected expansion in the economy, in 2016, the overall balance of the balance of payments is expected to improve considerably, to a surplus of US$46.26 million, from a deficit of US$107.68 million in 2015. This improvement is premised on positive turnarounds in the current and capital accounts.
The deficit on the current account is projected to improve by 19 percent, to US$116.86 million. Merchandise exports are expected to earn US$1.2 billion, a small increase of 2.5 percent. Merchandise imports are projected to rise by 2.7 percent to US$1.5 billion. Net services is projected to fall from US$255.8 million to US$237.4 million, principally on account of a reduction in net non-factor services. After falling in 2015, transfer payments are targeted to rise by 4.9 percent. The capital account is anticipated to grow appreciably to US$163.1 million, from US$71.5 million in 2015.
Central Government’s current revenue is projected at $173.3 billion for 2016, an increase of 7.2 percent. This growth will be driven by the expected buoyancy of tax revenue, arising from tax efficiency, enforcement and administration measures that will be announced later.
As a result, tax revenue is projected to increase by $7.6 billion, or 5.3 percent, while non-tax revenue is estimated to grow by $4 billion, or 21.7 percent. Value added and income taxes are projected to grow by 9.9 percent and 5.3 percent, respectively. The higher revenue from VAT will be as a result of closer scrutiny of import declarations, domestic manufacture and trading activities. Similarly, income tax compliance, especially among the self employed, is expected to rise due to greater enforcement by the GRA. Both customs and excise taxes are expected grow by 6.8 percent and 0.7 percent, respectively.
Government last year, alluded to the fact that it would gradually transfer the accumulated funds from statutory agencies such as the Guyana Geology and Mines Commission (GGMC) and National Frequency Management Unit (NFMU) to the Consolidated Fund. This process started in 2015 and will continue in 2016 with a total of $8.7 billion estimated to be transferred to the Consolidated Fund. Royalty revenues are expected to amount to $3.9 billion, in 2016, based on the projected output of Guyana Goldfields Inc. and Troy Resources Inc.
Total expenditure is expected to increase to $223.3 billion, or 25.2 percent. This higher expenditure level will result from a significant growth of 70.2 percent in capital expenditure, consequent upon the implementation of several new projects that will aid in propelling economic growth.
Personal emoluments, other goods and services and transfer payments will increase by 11.8 percent, 10.5 percent and 25.1 percent, respectively. A small increase of 4.6 percent has been budgeted for interest payments.
Central Government’s deficit is projected at 4.7 percent of GDP, in 2016. While this is higher relative to the previous year, it is lower than the 2014 ratio. To repeat, this administration aims to promote robust economic growth in the context of a prudent fiscal policy, and this deficit-to-GDP ratio is in keeping with this goal.
The overall deficit of the Public Enterprises is projected at $5 billion, mainly driven by significantly higher capital expenditure while the overall deficit of the non-financial public sector is targeted at $38.2 billion, or 5.5 percent of GDP.
